Tag Archive: microcredit


Kiva Fellows letter of intent

To further my knowledge and understanding of microcredit, I am applying to be a Kiva Fellow for the fall semester.  Below is the letter of inent I wrote in my application.  I’m very excited to hear from them!

Microfinance fascinates me.  With all of the undergraduate research I have done on international development, microcredit stands out as one of the most effective forms of development.  While more traditional development has led to increased dependency on the West and has largely been counterproductive, microlending has created lasting effects among the world’s poor.  I first decided to do more research on the concept after reading Muhammad Yunus’s “Banker to the Poor.”  I was moved by the story of his first loan: Sufiya Begum, a Bangladeshi woman, was confined to a life of poverty for a lack of twenty-two cents.  After reading the book, I learned how microcredit has increased women’s empowerment, decreased hunger and poverty and given people hope who had none.Driven to find out more, I made microcredit and fair trade the topic of my senior thesis.  Through my research, I have learned about additional positive effects of microcredit.  Microfinance institutions give more than just credit: they provide training, insurance and savings programs for their borrowers.  The participants are given an opportunity to develop skills such as product development and marketing which can lead to the creation of better products, and therefore, a higher income potential.  The social effects of group lending programs are astounding.  When a community works together, they are all the more successful.

Last September, I created an internship for a fair-trade store in Raleigh, NC called Beleza.  I saw that the store needed help and wanted the chance to utilize my business knowledge in an area that I am deeply passionate about.  I recruited additional interns and we have improved the store’s website and created a store on eBay to facilitate the sale of products online.  I envision a synergistic link between fair trade and microfinance.

With all of the research I have done this semester on microcredit, I desire the chance to be a part of the financial revolution that has swept the world.  I crave the opportunity for an extended stay in a developing nation; my experiences in developing economies thus far have made a major impact on my life.  International development has been historically plagued by paternalistic “development interventions.”  I strive to be a servant leader.  The idea behind servant leadership is that a leader must place the needs of his or her team before addressing any personal needs.  Furthermore, the leader must recognize the inherent value of team collaboration and should not think that he or she has the best ideas.  I am prepared to extend my leadership skills to those in the community without being paternalistic.

I have permission from my University to take a one semester leave in order that I may serve as a Kiva Fellow.  Though I have not graduated, I have earned 155 credits and would benefit from the opportunity to be a Fellow before graduating.  A fellowship with Kiva would be a valuable contribution towards my undergraduate career and would prepare me for future work in the field of international development.

january is for jumping back in

After a hiatus for break, the interns are back on track.  We have restructured a little bit to make our work more efficient.  We all meet at the same time now instead of having separate meeting times.  As PDail gets ready to co-lead a relief trip to Haiti, the interns have a big surprise for everyone.  I can’t tell you what it is yet, but be looking out for some exciting new things.  We’ve come up with some excellent goals to improve the amount of online traffic we receive.  Selling our handmade crafts and jewelry can be difficult online, but we have some cool solutions in the works.

In other news, I will be investigating how fair trade and microcredit loans are interrelated in my senior research for International Studies.  I am excited to be able to apply things I have learned in my degrees towards my work with Beleza.  The Caldwell Fellows and I just invested in a microcredit loan to help a farmer in Ecuador buy more farming equipment.  He is producing oranges, cassava, corn and cacao.  We used kiva.org as the broker for the loan.

Josè Narciso Quinatoa Arias

Meet Josè Narciso Quinatoa Arias, the borrower.

microcredit micromanaged

Fair trade is an integral part of sustainable human development.  So, too, is microfinance.  People in developing countries need access to credit so they can have the capital to start a business or make their crafts.  Many of the artisans at Beleza got started with a microcredit loan.  Unfortunately, last week’s Economist featured an article stating, among other things, that Bangladesh would be capping the interest rate on microcredit loans at 27%.

Why is this bad?  The interest charged on the loans helps pay for training programs and the administration costs it takes for locally-employed loan officers to bike from door to door establishing new loans and checking on the lending groups.  By capping the interest, Bangladesh is effectively limiting the amount of loans available.  It’s a shame this is happening here, where it all started by the work of Dr. Mohammed Yunus.  I just finished his book, “Banker to the Poor.”

Link to the article:  http://www.economist.com/node/17522606

microcredit

New interest cap will reduce amount of loans available

access to credit

For many artisans participating in fair trade, access to credit is unthinkable.  Or it was.  Dr. Mohammed Yunus, an economics professor in Bangladesh, started the first microcredit program.  He and his institution, the Grammen Bank, both won the Nobel Peace Prize.  Microcredit is a big step towards eradicating poverty and is an integral piece of sustainable human development.  Loans are very small; the average loans are worth $25-$250 for first time lenders.  This money helps people in developing countries buy supplies to make their crafts or materials for farming.

I just did a marketing project on Opportunity International, a large microcredit organization that is active in 15 countries.  They have a 98% repayment rate on their loans – higher than commercial loans.  How is this possible?  Lenders form trust groups of about 30 people.  They meet each week to make a payment on their loan.  If they don’t make a payment, the other members hold them accountable.  Imagine a woman has a sick child so she is unable to go to the market to sell her crafts.  She cannot make her weekly payment.  Someone in the trust group offers to look after her child so that she can sell her goods and then make her payment.  In effect, these loans help build community.  I’m reading Dr. Yunus’s book, “Banker to the Poor” to learn about how it all started.

Many of the products that are sold at Beleza start with a microloan.